The Monetary Authority of Singapore (MAS) is likely to keep policy settings unchanged this month, leaving the estimated slope and width of its SGD NEER policy band at 0.5 percent per annum and 2 percent respectively.
The SGD NEER has remained near the strong end of its parity band despite two earlier slope reductions in January and April.
Singapore’s policy strength, safe-haven status and resilient growth in the second quarter have attracted strong investor inflows. Q2 growth rebounded strongly to 1.4 percent after a 0.5 percent quarterly contraction in Q1, avoiding a technical recession.
The trade ministry downgraded its 2025 GDP forecastin April to a range of 0 percent to 2 percent from 1 percent to 3 percent and Trade Minister Gan Kim Yong warned this month of slower growth in the second half as the front-loading of exports ahead of US tariffs wanes.
The government is launching a Business Adaptation Grant in October to help local companies adapt to the new tariff environment, Singapore media reported.
Domestic consumption and confidence in the economy remain solid, as reflected in the strong property market, high Certificate of Entitlement prices for cars, and Singapore’s benchmark stock index hitting record highs.
Meanwhile, inflation has remained contained due to the strong SGD. Core inflation slowed to0.6 percent year-on-year in May and is forecast to rise 0.7 percent in June, still within the lower part of the MAS’ 0.5-1.5 percent forecast range.
USD/SGD has risen from a low of 1.2698 on July 1, in line with a bounce in the US dollar index. The pair is likely to end the year on the 1.29 handle as strong inflows and bullish stock markets continue to boost domestic sentiment.
